2019 (11) TMI 608 - SC - Customs

Applicability of Consumer Protection Act, 1986 in case of REP License in terms of the import and export policy - Whether Government is a service provider - principal issue that was canvassed before the SCDRC and in revision was that the consumer fora had no jurisdiction to entertain a consumer complaint on the ground that no service is rendered by the Union Government when it provides incentives under the Exim policy - whether a person who has made a claim under an REP licence issued in terms of the import and export policy - in this case, the policy for April 1988 to March 1991 - is a consumer within the meaning of Section 2(1)(d) of the Consumer Protection Act, 1986? HELD THAT - The objects of the policy are essentially to stimulate industrial growth by providing easy access to imported capital goods, raw materials and components, to substitute imports and promote self-reliance and to provide an impetus to exports by improving the quality of incentives. The Exim policy is an incident of the fiscal policy of the State and of its overall control over foreign trade. As an incident of its policy, the State may provide a regime of incentives. The provision of those incentives does not render the State a service provider or the person who avails of the incentives as a potential user of any service. The State, in exercise of its authority to utilise and collect revenue, puts in place diverse regulatory regimes under the law. The regime may provide for modalities for compliance, penalties for breach and incentives to achieve the purpose of the policy. The grant of these incentives does not constitute the State as a service provider. In BIHAR SCHOOL EXAMINATION BOARD VERSUS SURESH PRASAD SINHA 2009 (9) TMI 930 - SUPREME COURT which was decided by a Bench of two judges, the issue was whether the Board of Examinations governed by state law is amenable to the jurisdiction of the District Forum under the Consumer Protection Act, 1986 - Answering the question in the negative, this Court held that the Board is not a service provider and a student who takes an examination is not a consumer. There was an absence of jurisdiction in the District Forum to entertain a complaint under the Act in regard to a claim arising out of and founded on an REP licence governed by the Exim policy - Appeal allowed.

Issues Involved:
1. Whether a person who has made a claim under an REP licence issued in terms of the import and export policy is a consumer within the meaning of Section 2(1)(d) of the Consumer Protection Act, 1986.
2. Whether the Government, in providing benefits under the Exim policy, renders a 'service' amenable to the jurisdiction of the consumer fora established under the Act.

Detailed Analysis:

Issue 1: Consumer Definition under Section 2(1)(d) of the Consumer Protection Act, 1986
The primary issue in this case was to determine if the respondent, who made a claim under an REP licence as per the import and export policy, qualifies as a consumer under Section 2(1)(d) of the Consumer Protection Act, 1986. The respondent carried out exports between 1988 and 1993 and applied for an REP licence. However, the premium entitled under the scheme was not paid due to the discontinuation of the scheme. The respondent's attempts to secure the premium were unsuccessful, leading to the institution of proceedings before the District Consumer Disputes Redressal Forum, which ruled in favor of the respondent.

Issue 2: Government's Role in Providing Services under Exim Policy
The second issue was whether the Government, by providing benefits under the Exim policy, renders a 'service' that falls under the jurisdiction of consumer fora. The appellants contended that the Exim policy is part of the fiscal policy and regulatory control over foreign trade, and the benefits granted under this policy do not constitute a service within the meaning of the Act. They argued that the policy aims to encourage exports and regulate imports, and the incentives provided do not make the Government a service provider.

Legal Definitions and Interpretations:
The judgment delved into various definitions under Section 2 of the Act:
- Consumer (Section 2(d)): Defined as a person who buys goods or avails services for consideration, excluding those availing services for commercial purposes.
- Consumer Dispute (Section 2(e)): A dispute where the allegations in the complaint are denied or disputed.
- Defect (Section 2(f)): Any fault or shortcoming in the quality or standard of goods.
- Deficiency (Section 2(g)): Any fault or inadequacy in the quality or manner of performance of a service.
- Service (Section 2(o)): Service of any description made available to potential users, excluding services rendered free of charge or under a contract of personal service.

Analysis of the Exim Policy:
The Exim policy for April 1988 to March 1991 aimed to stimulate industrial growth, promote import substitution and self-reliance, and enhance export incentives. The policy's objectives were to provide easy access to imported goods, promote exports, and simplify procedures. The court noted that the policy is an incident of the State's fiscal policy and regulatory control over foreign trade, and the incentives provided do not render the State a service provider.

Relevant Case Law:
1. Vikas Sales Corporation v. Commissioner of Commercial Taxes: The Court held that the transfer of an REP licence constitutes a sale of goods under State Sales Tax Legislation.
2. Bihar School Examination Board v. Suresh Prasad Sinha: The Court ruled that the Board is not a service provider, and a student participating in an examination is not a consumer.

Conclusion:
The Supreme Court concluded that the provision of incentives under the Exim policy does not constitute a service, and the respondent is not a consumer under the Act. Therefore, the District Forum lacked jurisdiction to entertain the complaint. The judgment of the NCDRC dated 4 April 2012 was set aside, and the appeal was allowed. No order as to costs was made, and any pending applications were disposed of.

← Previous Next →