9911796707
Advanced Search 
TMI Blog2016 (4) TMI 185X X X X Extracts X X X X X X X X Extracts X X X X ..... rchase made by an Export Oriented Unit (hereinafter referred to as " EOU" ) from another EOU would qualify for reimbursement of Central Sales Tax as applicable, in terms of the extant provisions of the law. 3. Since the issues involved in both these writ petitions are common, by consent of both sides, both the writ petitions are disposed of by this common order. 4. According to the petitioner, it is an 100% Export Oriented Unit (100% EOU), duly registered with the Development Commissioner, Madras Export Processing Zone (MEPZ), Tambaram, Chennai-45, the third respondent herein, as a 100% Export Oriented Unit to manufacture and export of injectable drugs and infusion technologies formed in the year 2009 and is a subsidiary of Hospira Inc, Lake Forest, Illinois, U.S.A. According to the petitioiner, Hospira group is one of the world's largest producer of generic injectable pharmaceuticals, manufacturing generic acute-care and oncology injectables. The petitioner Company is engaged in production and export of pharmacopeia preparations such as Meropenem Injections, Cefepime Injections, Cefoxitin Injections, Biapenem, Cefazoline Injection etc and the entire product range is exported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Government of India, Ministry of Finance, New Delhi for imported as well as indigenous raw materials/capital goods. The imported goods are not subject to sales tax or Value Added Tax (VAT) or Central Sales Tax (CST) in terms of the provisions contained in CST Act 1956. However, the taxes on sale of goods imposed by States, is not exempted under various State enactments, including the Tamil Nadu Value Added Tax Act, 2006, (TNVAT Act 2006) when they are procured domestically by the Petitioner Company. However, the VAT paid by the Petitioner Company is cenvatable as the same is allowed as input tax credit (ITC) under TNVAT Act, 2006, which can be used for discharging the output tax on finished goods, or claimed as refund in terms of the said Act. 8. Further, according to the petitioner, as regards the levy of CST when the purchase/sale takes place during the course of inter-state sale there is no exemption available under CST Act, 1956. The supplier of raw material therefore charge CST at concessionial rate of 2% on the strength of Form-C issued by the petitioner. The said CST is not cenvatable or can be availed as input tax credit, and therefore is a cost to petitioner as well as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... munication dated 11.06.2013, the second respondent has again sought for clarification from the Director, Special Economic Zone, Department of Commerce, New Delhi. 11. The petitioner company were constantly purusing the matter and making representations by periodically communicating to the respondents. The petitioner reeived a communication dated 28.04.2014 from the Assistant Development Commissioner, MEPZ, Chennai, wherein, it was informed that the third respondent was not in a position to consider their request for reimbursement of CST claims for the inputs procured from another EOU, M/s Orchid Chemicals & Pharmaceuticals limited, Aurangabad, for the period from January 2012 to September 2013. Further, the petitioner was informed that the decision was taken based on the communication letter dated 11.04.2014, issued by the first respondent. Challenging the communication dated 28.4.2014, issued by the Development Commissioner, MEPZ, Chennai and the communication dated 11.04.2014, issued by the Secretary, Ministry of Commerce and Industry, New Delhi, the petitioner has filed the above writ petitions. 12. According to the respondents 1 to 3, the claim of the Export Oriented Units (E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operation of the substantive right granted to the petitioner. Further, the learned Senior Counsel submitted that the Foreign Trade Policy 2015-2010 is identical and unchanged, as was originally provided for in paragraph 6.11 of the Policy and further submitted that not allowing the reimbursement claims of CST of the petitioner, would fall afoul of Article 14 of the Constitution of India since the action of the respondents is arbtirary and violation of Article 14 of the Constitution. 15. In support of his contention, the learned Senior Counsel relied on the following judgments: (i) 2013 10 SCC 772 (Union of India (UOI) and anor vs National Federation of the Blind and others, wherein the Apex Court has held as follows: 45) The heading of a Section or marginal note may be relied upon to clear any doubt or ambiguity in the interpretation of the provision and to discern the legislative intent. However, when the Section is clear and unambiguous, there is no need to traverse beyond those words, hence, the headings or marginal notes cannot control the meaning of the body of the section. Therefore, the contention of Respondent No. 1 herein that the heading of Section 33 of the Act is "Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... governed by the old provision pertaining to period of limitation. Procedural law is retrospective meaning thereby that it will apply even to acts or transactions under the repealed Act. 25. Law on the subject has also been elaborately dealt with by this Court in various decisions and reference may be made to a few of those decisions. This Court in Garikapati Veeraya v. N. Subbiah Choudhry [AIR 1957 SC 540] , New India Insurance Co. Ltd. v. Shanti Misra [(1975) 2 SCC 840], Hitendra Vishnu Thakur v. State of Maharashtra [(1994) 4 SCC 602 : 1994 SCC (Cri) 1087] , Maharaja Chintamani Saran Nath Shahdeo v. State of Bihar [(1999) 8 SCC 16] and Shyam Sunder v. Ram Kumar [(2001) 8 SCC 24] , has elaborately discussed the scope and ambit of an amending legislation and its retrospectivity and held that every litigant has a vested right in substantive law but no such right exists in procedural law. This Court has held that the law relating to forum and limitation is procedural in nature whereas law relating to right of appeal even though remedial is substantive in nature. 26. Therefore, unless the language used plainly manifests in express terms or by necessary implication a contrary intent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere drafted with divine prescience and perfect clarity. In the absence of it, when a defect appears a judge cannot simply fold his hands and blame the draftsman. He must set to work on the constructive task of finding the intention of Parliament, and he must do this not only from the language of the statute, but also from a consideration of the social conditions which gave rise to it, and of the mischief which it was passed to remedy, and then he must supplement the writter word so as to give `force and life' to the intention of the legislature. That was clearly laid down by the resolution of the judges in Heydon's case, and it is the safest guide today. Good practical advice on the subject was given about the same time by Plowden. . . . . . Put into homely metaphor it is this: A judge should ask himself the question: If the makers of the Act had themselves come across this ruck in the texture of it, how would they have straightened it out? He must then do as they would have done. A judge must not alter the material of which it is woven, but he can and should iron out the creases. (vii) 1949 (2) ALL ER 155 (Seaford Court Estates Ltd vs Asher), wherein the Court of Appeal h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as follows: "15. We are also of the opinion that a delegated power to legislate by making rules 'for carrying out the purposes of the Act' is a general delegation without laying down any guidelines; it cannot be so exercised as to bring into existence substantive rights or obligations or disabilities not contemplated by the provisions of the Act itself ". (ix) 2003 (156) ELT 819 (Bom) (Narendra Udeshi vs Union of India), wherein the Bombay High Court held as follows: 15. The procedures to be prescribed by an authority in implementing the policy must be in consonance with the policy. If the procedural norms are in conflict with the policy, then the policy will prevail and the procedural norms to the extent they are in conflict with the policy, are liable to be held to be bad in law. In the instant case, since the impugned circulars and the public notice issued by DGFT are in conflict with the policy, the same are liable to be quashed and set aside. 16. Countering the submissions made by the learned Senior Counsel for the petitioner, Mr.V.P.Sengottuvel, learned Standing Counsel appearing for the respondents, submitted that paragraphs 6.11 and 9.21 would clearly establ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Government in the formulation of Exim Policy and shall be responsible for carrying out that Policy. Under Section 6(3) of the 1992 Act only Central Government is empowered to amend the FTP. 31. Under para 2.3 of the FTP (2004-09) DGFT is empowered to interpret the Policy. If any doubt or question arises in respect of interpretation of any provision in FTP or in the matter of classification of any item in the ITC (HS) or in the Handbook, the said question or doubt shall be referred to the DGFT, whose decision thereon shall be final and binding. (iii) 2011 (1) SCC 640 (Bajaj Hindustan Limited vs Sir Shadi Lal Enterprises Limited and another), wherein, the Apex Court has held as follows: 21. It is settled law that in the areas of economics and commerce, there is far greater latitude available to the executive than in other matters. The Court cannot sit in judgment over the wisdom of the policy of the legislature or the executive.Thus in Balco Employees' Union (Regd.) vs. Union of India and Ors. 2002(2) SCC 333 it was observed (vide paragraph 92 and 93) : "92. In a democracy, it is the prerogative of each elected Government to follow its own policy. Often a change in Governm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the supplier. Notwithstanding the above, EOU/EHTP/STP/BTP units shall, on production of a sutiable disclaimer from DTA supplier, be eligible for obtaining entitlements specified in chapter 8 of FTP. For claiming deemed export duty drawback, they shall get brand rates fixed by DC wherever All Industry Rates of Drawback are not available. (b) ...... (c) In addition, EOU/EHTP/STP/BTP units shall be entitled to following: (i) Reimbursement of Central Sales Tax (CST) on goods manufactured in India. Simple interest @ 6% per annum will be payable on delay in refund of CST, if the case is not settled within 30 days of receipt of complete application (as in paragraph 9.10.1 of HBP v1) (ii) Exemption from payment of Central Excise Duty on goods procured from DTA on goods manufactured in India. (iii) ... (iv).... 19. Under paragraph 2.4 of the Policy, the Directorate General of Foreign Trade (DGFT) may, specify the procedure to be followed by an exporter or importer or by any licensing/regional authority or by any other authority for purposes of implementing provisions of FIDR Act, the Rules and the orders made there under and Policy. 20. In pursuance of the delegated powers, prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in "India" except specifically Special Economic Zones". 25. The objective of the Hand Book as per paragraph 1.2 is to implement provisions of FT (D&R) Act, Rules and Orders made thereunder and FTP (2009-14) by laying down simple, transparant and EDI compatible procedures, which are easy to comply with and administer, for effacious management of foreign trade. Therefore, as per paragraph 1.2 of the Hand Book, the Handbook and the Appendix are procedural instruments, required and notified to operationalise the substantive rights contained in the policy. 26. Though a bare reading of the Appendix would give rise to a prima-facie view that the same is applicable only for the purchases made by EOUs from units in DTA, the substantive right under the policy allows for reimbursement of CST paid by EOU units on inter-state purchases, irrespective of the constitution of the manufacturer. When the policy contemplates reimbursement of CST paid by EOU units on inter-state purchases, irrespective of the constitution of the manufacturer, the procedure for effecting this right, however, is restricted only to the purchases made from units in DTA. 27. It is a settled position that the procedure f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t case, for the reason that the judgments are relating to the interference of the Court over the wisdom of the policy of the legislatiion or the executive. In the judgment reported in 2004 (11) SCC 798 (Commissioner of Central Excise, Chandigarh-I vs Mahaan Dairies), the Hon'ble Supreme Court held that in order to claim benefit of a notifiation, a party must strictly comply with the terms of the notification and the wording of the Notification cannot be added or stretched. 33. In the present case, when the policy provides for reimbursement under paragraph 6.11, the said objective was prevented or diluted by the Appendix. As already stated, the Appendix is meant for effectuating the rights contained in the policy and not to frustrate the operation of the substantive right. The Appendix should be meant only for reaching the objective and definitely should not be meant for defeating a person from getting the fruits of the substantive right provided in the policy. A procedure should not run contrary to the substantive right in the policy. In the case on hand, it is only a procedural amendment and not a policy amendment. When the policy gives a right to the petitioner for claiming ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
