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TMI Blog1989 (2) TMI 248X X X X Extracts X X X X X X X X Extracts X X X X ..... Council (for short the AEPC ). 3. Export of garments is regulated under the Import and Exports Control Act, 1947 and Export (Control) Order, 1988 issued under this Act. An Import (Control) Order, 1955 has also been issued under the Act. The Import/Export Policy is announced by the Government of India by means of public notices in the Gazette of India (Extra-Ordinary). The primary object of Export Policy is to promote export to the maximum extent but in such a manner that the economy of the country, is not affected by unregulated exports of items essentially needed within the country. Export Control is, therefore, exercised with respect to a limited number of items whose supply position demands that their exports should be regulated in the larger interest of the country. The object is also to ensure the maximum benefit by way of the highest foreign exchange realisations made by the country. 4. AEPC is a company registered under the Companies Act. Its objects include, inter alia, the registration and distribution of quotas for the export of garments to foreign countries with the approval of the Ministry of Commerce and in accordance with the policy laid by the Government of Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n may be reproduced as under:- Sl. No. Item S.No. as in Part B of Schedule I Condition(s) to be fulfilled/documents to be produced. 55. Export to E E C Member States of Textiles and Textiles products made from cotton, wool and man made fibres (excluding jute, silk and flax) under the Indo EEC Textile Agrement B.70(v) (i) Against allocation of export entitlement by (a).................. (b) The Apparels Export Psromotion Councilfor garments and knitwear (excluding woollen knitwear) (c).................... Necessary certification on shipping bills will, however, be made by the Cotton Textiles Export Promotion Council for all fabric and made ups (including woolen fabrics and made-ups) and in respect of all agrments and knitwear (including woollen garments and knitwear) such certification will be made by Apparels Export Promotion Council. (ii) In the matter of allocation of export entitlement, the Export Promotion Councils will observe the guidelines issuedby the Ministry of Commerce and will make efforts to ensure reasonable realisation through floor price mechanism. (ii) ................. (iv) .................. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brought under the new system called the Open Tender System (OTS). The remaining eighty-five per cent of the superfast categories are allocated to other systems. It may, however, be noted that out of one hundred twentythree products, twentyeight items have been identified as superfast items. The challenge is limited to the OTS and thg policy thereto is contained in para 7 of the policy for 1988-90. It will be appropriate to set out para 7 of the policy :- 7. Open Tender System For Superfast Categories : (i) Under this system, quantities will be allotted on the basis of sealed tenders. Exporters will have to submit sealed tenders indicating the premium offerred to the Government on the quantities applied for. Applications will have to be made within the quantitative ceiling to be announced by the Textile Commissioner; (ii) Allotments will be determined on the basis of the premium offerred and on a day when the available quantities are over-subscribed the eligibility will be decided on the basis of higher premium bid; (iii) Exporters would be required to export the goods on a minimum export price which would be the upset price plus the premium paid by the Exporters. The upse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reign exchange and all this only to favour the Government by paying premium. The petitioners have pointedout various anomalies in tl e Policy. They stated that earlier the quotas were divided into five categories; (1) past performance quota, (2) first come first serve small orders quota; (3) manufacturers quota; (4) Central/State Government Corporation s quota; and (5) Non-quota exporters. As noted above, present petition relates to modification made in the system of FCFS to OTS. FCFS small orders quota was basically evolved to enable small exporters to export their goods and thereby develop both themselves as exporters as well as the export market and that this system had been prevalent over the years. It is submitted that the ostensible object of OTS which is to provide opportunities to new exporters including small scale entreprenenrs cannot be achieved. Now, under OTS exporters will have to submit scaled tenders indicating the premium offerred to the Government on the quantities applied for; the only condition for eligibility being that the export price should not be less than the upset price as determined by the Textile Commissioner. Thus, allotments will be made on the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts. The respondents denied that the Government had no power under the Act or under any other provision to impose a premium of the sort. It was submitted that the Government did not fix any amount of premium to be paid compulsorily and that the amount is to be decided and offered by the competing individual exporter voluntarily and that the amount so collected would be used for export promotion activities particularly for the purpose of diversifying exports of slow moving items and to non-conventional markets etc. The provision of law under which the Government could collect premium was now here specifically mentioned in the counter affidavit. 9. The petitioners contend that since the export of garments is under OGL and no licence is required. The role of the Central Government is only to oversee and regulate the export in terms of bilateral agreements entered with various countries. They, therefore, say that charging of premium by the government on quota fixation is illegal and not backed byany authority of law and further that it is violative of Article 19(1) of the Constitution. They say that the Act and the Export Order do not authorise any such charging of premium which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under the powers of the government to control and regulate trade of export of garments. Mr. Dutta said that premium was not a tax and it was in the nature of fee for giving secured and ensured rights to the exporters to do export of a particular commodity on the basis of quota granted by the Government. He said this power to charge premium flowed from Section 3 of the Act and Clauses 3(2) and 3(3) of the Exports Order. To sustain the legality of the import he relied on Article 73 of the Constitution with reference to entries 41 and of List-1 of VIIth Schedule to the Constitution. 11. Mr. G.L. Rawal, learned Counsel appearing for AEPC, supported Mr. Dutta in his submissions. He said requirement of grant of quota was a condition of OGL and under the provisions of the Act and the Exports Order Government could levy premium to grant quota rights. 12. In the present case we are relieved of the necessity of finding out whether the impost in question is a tax leviable by the State, since such a claim was not made before us. The only question which remains to be considered is whether the impost levied under the policy is of the nature of a fee (or sort of a fee as respondents put ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otal value of about Rs. 17.8 crores had been drawn up out of the premium amount of over Rs. 20 crores realised during 1988. These schemes included over-seas publicity, air freight subsidy, sample subsidy, action plan for Japan and Austria and survey of readymade garments. For these schemes various amounts were placed at the disposal of AEPC and the Textile Commissioner or the Textile Committee. 14. On the question of authority to charge premium and if it was a fee whether it was justified and met the test of a fee, Mr. Salve referred to various decisions of the Supreme Court, noteably being Mohd. Yasin v. Town Area Committee, Jalalabad (AIR 1952 SC 115), State of Kerala v. P.J. Joseph (AIR 1958 SC 296), S. T. Swamiar v. Commr. HR CE (AIR 1963 SC 966), State of Madhya Pradesh v. Thakur Bharat Singh (AIR 1967 SC 1170), Bennett Coleman and Co. Ltd. v. Union of India (AIR 1973 SC 106), The Municipal Council, Madurai v. R. Narayanan etc. (AIR 1975 SC 2193), Kewal Krishan v. State of Punjab (AIR 1980 SC 1008), Southern Pharmaceuticals Chemicals v. State of Kerala (AIR 1981 SC 1863), Delhi Municipal Corporation v. Mohd. Yasin (AIR 1983 SC 617), Om Parkash Agarwal etc. v. Giri Raj Ki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ionship need not be direct and a mere casual relation may be enough. (6) A licence fee on a business not only takes away the property of the licensee but also operates as a restriction on his right to carry on his business, for without payment of such fee the business cannot be carried on at all. If the licence fee cannot be justified on the basis of any valid law no question of its reasonableness can arise, for an illegal impost must at all times be an unreasonable restriction and will necessarily infringe the right of the citizen to carry on his occupation, trade or business under Article 19(l)(g). Thus an impost not authorised by law cannot possibly be regarded as a reasonable restriction and therefore, always infringes the right of a citizen which is guaranteed under Article 19(1) (g). (7) An order which would be valid under any provision of law cannot be sustained on the ground it being an executive action. An executive action which operates to the prejudice of any person must have the authority of law to support it. Thus every act done by the Government or by its officers must, if it is to operate to the prejudice of any person, be supported by some legislative auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o pay and has to pay the maximum in order to be entitled to the quota. The schemes which the State proposes to take up after having collected the premium and which were mentioned during the course of arguments do not justify the impost and it does appear to us that these schemes have been thought of only now in order to justify the levy which is not legal. The impost in question will also appear rather against the export policy. The policy by which levy is imposed would not bring in higher foreign exchange for the country but it would only bring higher amount to the Government by charging maximum premium in terms of rupees. Earlier AEPC was itself highly critical of the OTS and questioned the wisdom of the Government in having introduced the policy. It was pointed out that this policy was likely to bring in more malpractices than to curb them. Since, we have taken the view that the impost in question is illegal, we do not want to go into the merits and demerits of the OTS. We may, however, note that the respondents had no comments to offer to the averments made in para 6 of the petition which we have reproduced above. 19. The petitioners have a right to export the garments under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing his goods at a price at the level of the upset price/floor price than the exporter who offers less premium but exports at a price higher than the upset/floor price. 21. In this case the premium charged/collected cannot be the price of any privilege which State can be said to have parted in favour of the exporters. The charging of premium in the instant case cannot be supported on any principle. If we examine the scheme of levy of fee (premium) even cursorily we find there is no co-relation whatsoever between the services and the levy which has no limit of excessiveness. It is not a fee in reality. The levy cannot also be justified on the ground as to how the amount collected would be utilised as we were told during the course of arguments, there being too much generalisation and no specifics. It is difficult to see how a new exporter who pays premium under OTS would at all be benefited, even indirectly, by giving air freight subsidy to the exporters of other items to Latin American countries etc. The press note which was produced before us showing measures to be taken by the Government to boost the export of textiles after collecting premium under OTS is undated. It does not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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