Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Forum Articles Highlights TMI Notes SMS News What's New Calendar Imp. Links Database More...
Extracts
Home List
← Previous Next →

JSW Steel Limited, Shri Rajiv Bakshi, Welspun Tradings Limited, Shri Suresh Darak, Shri Sourav Das, UPL Limited, Everest Flavours Limited Versus Union of India, The Director General of Foreign Trade, The Additional Director General of Foreign Trade, Foreign Trade Development Officer

Validity of Complete and overall cap on the duty credit scrip - Incremental Export Incentivisation Scheme (“IEIS”) - misuse of the scheme - Held that:- We find it difficult to accept the proposition that where there was no cap or limit in the 2012 Notification or in any of its surrounding or contemporaneous documents such as public speeches, policy documents, changes in the Handbook of Procedures and so on, such a restriction could be said to have been brought in by the 2013 Notification. We are .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

l exports, those incentives must be restricted to a paltry ₹ 20 lakhs. - There is no such restriction to be found in the 2012 Notification or in the 2013 Notification. We certainly cannot read it into 2013 Notification.

None can claim any benefit or incentive as an absolute right. However, a definite policy is enunciated in the present case. That policy extends an incentive for a demonstrated increase in exports. Its purpose is also clear, viz., to encourage more exports. The po .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

re, that restricts the incentives in their entirety would therefore be arbitrary, violating the policy’s objective and the mandate of Article 14 of the Constitution of India.

All four Petitions succeed in part. We hold that the 2013 Notification places no cap or restriction on the value of the IEIS scrip. The Authorities concerned will consider the Petitioners’ applications on merits bearing in mind our findings and this order, and without any regard to the impugned Clarification of 2 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

eni Chatterji, Senior Advocate, with Mrs. S.V. Bharucha JUDGMENT ( Per G. S. Patel, J. ) 1. In all four Writ Petitions, a common issue is raised as regards Notification No. 27(RE-12)/2009-2014 dated 28th December 2012, a subsequent Notification No. 44(RE-2013)/2009-2014 dated 25th September 2013, and a so-called Clarification dated 23rd September 2014 dated 23rd September 2014. Although the facts in each of these four Writ Petitions filed under Article 226 of the Constitution of India are somewh .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o give a fillip to exports, the Government introduced an Incremental Export Incentivisation Scheme ( IEIS ) by Notification No. 27(RE- 12)/2009-2014 dated 28th December 2012 Exhibit B , pp. 49-54 to WP No. 2122 of 2015 ( the 2012 Notification ). This Notification inserted paragraph 3.14.4 in the Foreign Trade Policy ( FTP ) 2009-2014. This Notification, while prescribing a number of restrictions, all of which the Petitioners accept, including a limitation as to the eligibility period or time, al .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

alifying restrictions. 5. Subsequently, by Notification No. 44(RE-2013)/2009-2014 dated 25th September 2013, Exhibit F , p. 61 to WP No. 2122 of 2015 ( the 2013 Notification ), according to the Petitioners, two paragraphs were added to the 2012 Notification. The first of these said that the benefit of the IEIS would be 25% growth or incremental growth of ₹ 10 crores, whichever was less. The second paragraph of the 2013 Notification, however, said in terms that claims in excess of this valu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e duty credit scrip irrespective of the actual incremental growth in exports for the period in question. 6. Having heard learned Advocates on both sides at some length and having considered, with their assistance, the material on record, including the two Notifications in question as also the Clarification, we are not persuaded that the interpretation of the Respondents is correct. It does not seem to us to be plausible to suggest that by the 2014 Clarification a cap or limit could have been int .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ment in 2012 decided to introduce the Incremental Exports Incentivisation Scheme. On 26th December 2012, it released a Press Note to this effect. Exhibit A , p. 48 to WP No. 2212 of 2015 It is stated that the Union Minister for Commerce, Industries and Textile had announced a decision to grant incentive on incremental exports. This was period specific: the incentive would be available in respect of incremental exports made for the quarter January to March 2013 relative to the corresponding previ .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

eved by the IEC holder) during the period 01.01.2013 to 31.3.2013 compared to the period from 01.01.2012 to 31.3.2012 on the FOB value of exports. Incremental growth shall be in respect of each exporter (IEC holder) without any scope for combining the exports for Group Company. (c) Incentive will be admissible only if the IEC holder has achieved growth in the financial year 2012-2013 vis a vis financial year 2011-2012. Quantum of benefit will be calculated on the incremental growth achieved subj .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

exports made through transshipment. (ii) Export from SEZ/EOU/EHTP/STPI/BTP/F TWZ (iii) Deemed Exports. (iv) Service Exports (v) Third Party exports (vi) Diamond, Gold, Silver, Platinum, other precious metal in any form including plain an studded jewellery and other precious and semi-precious stones. (vii) Ores and concentrates of all types and in all formations. (viii) cereals of all types. (ix) Sugar of all types and all forms. (x) Crude/ petroleum oil and crude / primary and base products of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sions of para3.17.10(b) of FTP shall not be admissible. This benefit will be over and above any benefit being claimed by the exporter under any of the Chapter 3 Schemes, therefore, provisions of para 3.17.8 of FTP 2009-14 will not be invoked for such benefit. Utilisation of Scrip (f) The duty credit scrip will be freely transferable. Such scrips shall also be eligible for domestic sourcing as per para 3.17.5 of FTP 2009-14. 8. The Scheme also sets out Eligibility Criteria in sub-clause (d). This .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ub-clause (e) contained a special provision which said that the Scheme was region-specific and only covered exports to USA, Europe and Asian countries. Sub-clause (f ) said that the duty credit scrip was freely transferable and was eligible for domestic sourcing. 9. The Petitioners do not question or challenge any of these restrictions in clauses (d) and (e) of paragraph 3.14.4 introduced by the 2012 Notification as being arbitrary and unreasonable. What the Petitioners emphasize is clauses (a) .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hieved growth in the FY 2012-2013 vis-à-vis FY 2011-2012. As Mr. Nankani points out, this was evidently mean to eliminate anybody trying to take undue advantage of a sudden, one-off or seasonal growth in exports. The intention was to provide a boost or an incentive to those who were steadily increasing their export business. 10. It is important to note that clause (b) contains no cap and clause (c) says that the quantum of benefit was to be calculated on the increased growth achieved subj .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

a prescribed time period, i.e., within twelve months from the date of the export, or within six months from the date of realization, or within three months from the date of providing or release of shipping bills, whichever was later. By a later Public Notice No. 13/2009-14 (RE-2013) dated 17th May 2013, Exhibit D , pp. 56-59 to WP No. 2122/2015 the necessary Form ANF 3F with a detailed worksheet for calculation was notified. This form set out a working tabulation to compute the entitlement at t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

re than 25% or where the total incremental exports was ₹ 10 crores or more. In Writ Petition No. 2122 of 2015, the Petitioners made an application on 3rd February 2014. Exhibit H , pp. 66-72 to WP No. 2122/2015 In this, it showed that it had been consistently increasing its exports and, in fact, had no domestic sales. It also demonstrated an export performance percentage growth of 200% for the relevant period. We may only note here that there were certain deficiencies that were noted in th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. The following sub-paragraphs (i) and (ii) are added below paragraph 3.14.4.(c) as under: (i) Benefit of Incremental Export Incentivisation Scheme for the last quarter of 2012-13 will be limited to 25% growth or Incremental growth of ₹ 10 crores in value, whichever is less. (ii) Claims in excess of this value will be subjected to greater scrutiny by Regional Authority. 14. Mr. Nankani s submission is that he has no quarrel with this Notification as it stands, because on the face of it it .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t to greater scrutiny by the Regional Authority. This, according to Mr. Nankani, is completely sound, because where a large incremental export is claimed and a very large credit is claimed on that basis, it is of course necessary for the Revenue to exercise greater caution and care. But the same degree of care, caution and scrutiny may not necessarily be required for each and every single application. Those that are more modest in their claims might require a far less finegrained an examination .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

This amendment to the Handbook in terms specified the documents likely to be called for by the Regional Authority while carrying on the greater scrutiny contemplated in sub-clause (ii) of the 2013 Notification. These documents included calling for evidence for manufacture/purchase of export goods, i.e., excise returns, sales tax returns or other evidence; checking exports of company from whom goods have been purchased; calling for other evidence to justify export growth; etc. Even the Handbook .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

2015 The Petitioners set out their submissions in this regard and requested that the application at the rate of 2% on the entire incremental growth be considered. The Assistant DGFT replied by his letter dated 11th February 2015. Exhibit R , p. 90 to WP No. 2122/2015 This is one of the documents impugned in Writ Petition No. 2122 of 2015. The Assistant DGFT stated that the value claimed of the IEIS scrip was limited to 25% growth in exports or incremental growth of ₹ 10 crores in value whi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ng sub-paragraphs (i) and (ii) were added below paragraph 3.14.4 of FTP as under: (i) Benefit of Incremental Export Incentivisation Scheme for the last quarter of 2012-13 will be limited to 25% growth or Incremental growth of ₹ 10 crores in value, whichever is less. (ii) Claims in excess of this value will be subjected to greater scrutiny by Regional Authority (b) Vide Notification No. 43 dated 25.09.2013 the following sub-paragraphs were added below paragraph 3.14.5(c) of FTP as under: (i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s the upper limit of grant of benefit. The second sub-para in both the notifications only directs RAs to exercise caution while dealing with cases of incremental growth of exports under the scheme. It does not entitle any Applicant to higher levels of benefits under the scheme. 4. Accordingly RAs may compute entitlement under the scheme as under: IEIS for the last quarter of 2012-13: Benefit of Incremental Export Incentivisation Scheme for the last quarter of 2012-13 will be limited to 25% growt .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

5 Exhibit U , p. 97 to WP No. 2122/2015 in which the Assistant DGFT reiterated the stand that the IEIS scrip was limited to ₹ 20 lakhs and that the 2012 Notification read with the 2013 Notification did not by itself confer any additional benefits. 20. Mr. Nankani s submissions, supported by learned Counsel for the Petitioners in the other Writ Petitions, are straightforward. They say that the 2012 Notification contained no such restriction as is now sought to be imposed. There were indeed .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ch 2012. Indeed, they also accept that where there is exceptionally high incremental export for the period under consideration, additional scrutiny may indeed be required. But neither the 2012 Notification nor the 2013 Notification in any way restrict or cap the total entitlement of ₹ 20 lakhs. Mr. Nankani s submission is that if such a cap was intended, then, clause (ii) of the 2013 Notification was unnecessary: (ii) Claims in excess of this value will be subjected to greater scrutiny by .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

mean, Mr. Nankani submits, that a temporary, seasonal or oneoff increase in exports, something that is merely an aberration and does not display or evidence a consistent growth in export business and turnover, should not be held eligible for such an incentive. For genuine exporters who do qualify and show an incremental growth in export, this incentive, he says, is rendered illusory if it is capped at ₹ 20 lakhs when, on a plain calculation of 2% of the incremental growth the value could b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Notification is not under challenge at all. All that the Petitioners challenge is the Clarification. The Respondents are not relying on the Clarification. The plain meaning of the 2013 Notification is that it imposes a cap and this cap is necessary to prevent unintended benefits. He emphasizes that the 2013 Notification expressly states that it comes into force with immediate effect and, further, that it applies to the relevant period only, i.e., the last quarter of 2012-2013. This is not, ther .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ap or limit on the total value of the IEIS scrip. 24. Relying on the Supreme Court decision in M/s New India Sugar Works v State of Uttar Pradesh & Ors., (1981) 2 SCC 293 which in turn cited with approval the earlier decision of the Supreme Court in Trimbak Damodar Raipurkar v Assaram Hiraman Patil & Ors., AIR 1966 SC 1758 : 1962 Supp (1) SCR 700 Mr. Rana submitted that there is a difference between an existing right and a vested right. Where a statute operates in future, it is not retro .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ssion is slightly different: all that he says is that this kind of clarification or amendment is not one that can reasonably be said to apply only in praesenti or in futuro, irrespective of the wording of the 2013 Notification. Of necessity, it relates back to the 2012 Notification and seeks to impose a limit on it where none existed. Matters might have been different, he says, and we agree, if there was material to show that previous applications were allowed without limit, and the 2013 Notific .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s speech, the Union Minister spoke of an incentive at the rate of 2% on incremental growth. He mentioned certain exclusions but did not specify any cap. 27. Mr. Shah for the Petitioners in Writ Petition No. 10437 of 2015 drew our attention to the new Policy that has been announced, by which this Incentive Scheme has been extended. A fresh Circular is issued. This is in terms of the 2012 Notification but without the so-called cap or limit said by the Respondents to have been specified by the 2013 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ition that where there was no cap or limit in the 2012 Notification or in any of its surrounding or contemporaneous documents such as public speeches, policy documents, changes in the Handbook of Procedures and so on, such a restriction could be said to have been brought in by the 2013 Notification. We are mindful of the purpose and intent of the 2013 Notification. It is entirely salutary. None should receive unintended benefit from the 2012 Notification. Certain checks and measures are undoubte .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ead it into 2013 Notification. To do so would be to render, as Mr. Nankani says, clause (ii) entirely redundant. If the cap was ₹ 20 lakhs, no exporter, no matter what is his incremental exports for the period in question, would ever submit an application or make a claim in excess of ₹ 20 lakhs. There would then be no question of greater scrutiny by the Regional Authority. That clause would be entirely meaningless. Evidently, therefore, what clause (ii) says is that while claims up t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e more exports. The policy s terms must, therefore, receive an interpretation as would advance its stated purpose, viz., to promote and encourage exports. That this is also one of the avowed objects of the Foreign Trade (Development and Regulation) Act, 1992 is also not doubted. Where the policy did not itself place any such cap - and plainly it did not, for we find no words of limitation in it, other than those in the eligibility criteria, and these are accepted - any interpretation of the 2013 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

se of a policy interpretation by those in charge of its implementation by which, ostensibily to prevent undue benefit to some, undue and unjustified hurdles and obstacles are created disabling bona fide beneficiaries from availing of the policy s incentives and benefits. It is this aspect, highlighted throughout, that persuades us to agree with the Petitioners-Exporters. 31. The other important and equally salutary principle of interpretation is that in a beneficient piece of legislation or a po .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

, we must also adopt a purposive approach to its interpretation and construction. Mr. Rana s submissions do not tell us how a cap or limit or specifying the maximum benefit would advance the purpose of the incentive scheme. All that these submissions tell us is that there was a concern that none should receive undue or unintended benefit. There can be no cavilling with that. But it surely cannot be suggested that any incentive above ₹ 20 lakhs is axiomatically and ipso facto an unintended .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

  ↓     Latest Happening     ↓  

Forum: GST rates on mobile recharge business

Forum: Cess paid instead of SGST

Circular: Constitution of National Anti-profiteering Authority (NAA) under GST-reg.

Forum: import purchase

Highlight: Sharing of expenses - BAS - promotion of business of group companies - sharing of expenditure for common facilities cannot be treated as service by one to another in such arrangement.

News: RBI Reference Rate for US $

Forum: 3B mistake

Forum: Input credit of gst paid on urd

Article: Credit of unsold stock [Section 140(3)] - Actual Credit as well as Notional Credit - Part-I - GST Transitional provisions

Circular: Certain Clarifications sought on Construction Services provided in the Real Estate Sector – reg.

Forum: transfer of shares

Forum: Input tax credit

News: Anti-dumping duty on import of bus/truck tyres from China

News: Fast-track GST refund, else ₹ 65K cr may be stuck: Exporters

Highlight: It is open to the Settlement Commission to use best judgment in arrival of the figure. Nonetheless it has to explain the manner in which the best judgment figure has been arrived at by the Settlement Commission - HC

Highlight: Deemed dividend u/s 2(22)(e) - advances given to societies - in the absence of legal right of the assessee in the said society the amount advanced cannot be treated as deemed income.

Highlight: When electrical installations are treated as plant and machinery the depreciation has to be allowed @ 25% as per provisions contained u/s 32

TMI Note: Capital Gain - transfer of right in the land or transfer of land itself - addition u/s 50C - Harassment to the honest tax payers

Highlight: Option to avail composition scheme under GST by electronically filing an intimation in FORM GST CMP-02 and FORM GST ITC-03 upto 30-9-2017 - See Rule 3(3A)

TMI Note: Does ICDS apply for the purposes of computing exemption u/s 11 to 13.

Highlight: Voluntary Reporting of Estimated Current Income and Advance Tax Liability - CBDT issues draft notification

TMI Note: Certain ICDS provisions are inconsistent with judicial precedents. Whether these judicial precedents would prevail over ICDS.

Highlight: Provisions of ICDS shall prevail w.e.f. AY 2017-18 to the transactional issues dealt therein over earlier judicial pronouncements.

Notification: Levy of anti dumping duty on New/unused pneumatic radial tyres with or without tubes and/or flap of rubber (including tubeless tyres) having normal rim dia code above 16 originating in, or exported from China PR

News: Voluntary Reporting of Estimated Current Income and Advance Tax Liability

TMI Note: In case of conflict between ICDS and other specific provisions of the Income-tax rules, 1962 governing taxation of income like rules 9A, 9B etc. of the Rules, which provisions shall prevail.

TMI Note: Does ICDS apply to computation of Minimum Alternate Tax (MAT) u/s 115JB of the Act or Alternate Minimum Tax (AMT) u/s 115JC of the Act.

TMI Note: Where a term has not been defined under ICDS, nor under the Act, but has different interpretations given to it by the courts in tax cases, and in ICAI Accounting Standards, which interpretation would prevail while interpreting ICDS.

TMI Note: Whether the provisions of ICDS apply to a non-resident who claims the benefit of a double taxation avoidance agreement (DTAA).

TMI Note: In case any of the ICDS provisions is contrary to a circular or press release issued by the CBDT, which would prevail over the other.

TMI Note: ICDS-I requires disclosure of significant accounting policies and other ICDS requires specific disclosures. Where is the taxpayer required to make such disclosures specified in ICDS.

Notification: Income Computation and Disclosure Standards (ICDS) - New ICDS to be effective from AY 2017-18

News: RBI Reference Rate for US $

Highlight: GST - Detention of goods under transport - discrepancy in documents - the statutory provisions provide a mechanism for adjudication following detention of goods including for the provisional release thereof pending adjudication - HC

Highlight: Reassessment - first few paragraphs of the assessment order dealt with objections and disposed of accordingly - Unfortunately, the manner in which the AO has decided the issue is wholly unsustainable in law - HC

Highlight: Business expenditure u/s 37 - liquidated damage - breach of contract terms - Expenditure was not incurred for any purpose which is an offence or which is prohibited by law - cannot be disallowed - HC

Highlight: Valuation - inclusion of reimbursement of expenses - managing participation of clients in certain mela, fairs, promotional activities etc. - They are liable to service tax on the gross amount received - They cannot restrict their tax liability to only agency commission

Highlight: TDS liability - ITAT confirmed the liability - We do not see how it is possible for us to uphold the order of the Tribunal and when it purports to decide two Appeals of the Revenue by single paragraph conclusion - HC

Highlight: Reopening of assessment - sufficiency of material available with the AO to form a belief that income chargeable to tax had escaped assessment - bogus purchases - seller refused to respond - notice would not be interfered with - HC

Highlight: Exemption u/s 11 - education activities - transport and hostel facilities surplus cannot be considered as business income of the assessee society

News: Draft Notification for insertion of new rule 39A in the Income-tax Rules, 1962 – comments and suggestions-reg.

Highlight: Genuineness of labour wages expenses, embroidery charges, fabrication expenses etc. - getting work done through small workmen who do not have any permanent place of residence - disallowance of ad hoc expenditure deleted.

Highlight: Project import - Since the goods were never used for the purpose for which it was imported, the actual user condition has been violated - Redemption fine and penalty imposed.

Highlight: Penalty u/s 112 (a) - CHA - Lack of due diligence and failure to take more precautions can not, by itself, bring in penal consequences

Highlight: Import of services - GST - The fact that those services were received outside India will not change the fact that the services have been paid for by the beneficiary appellant, who is located in India. - Demand confirmed.

Notification: SEZ for IT/ITES at Madhurwada Village, Visakhapatnam District in the State of Andhra Pradesh - denotified.

Highlight: Merely because payment is received in Indian rupee, it cannot be said that payment against export has not been received in convertible foreign exchange.

Highlight: Merely vehicle numbers was not mentioned on the invoices cannot be the reason to deny Cenvat Credit

Highlight: Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 120A of the Central Goods and Service Tax Rules, 2017 - Circular

Circular: Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 120A of the Central Goods and Service Tax Rules, 2017



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version